Moody's points to downgrade for Media General


Moody’s Investors Service has placed Media General’s credit ratings on review for possible downgrade in connection with the company’s pending negotiations with its bank group on an amendment to its senior secured credit facility. Approximately $300 million of rated debt is affected by the review.

The TV and newspaper company announced last week that it had gotten a waiver from its lenders to avoid a covenant default while it negotiates a larger refinancing package.

Moody’s said it has placed Media General’s B3 Corporate Family Rating (CFR), B3 Probability of Default Rating (PDR) and B3 senior secured bond rating on review for possible downgrade.

“Moody’s will focus the review on the proposed terms of the amendment, and Media General’s liquidity position and projected free cash flow if an amendment is completed. Media General’s credit facility matures in March 2013 and the company is at risk of violating the financial maintenance covenants in the facility. Moody’s continues to believe Media General will be able to complete an amendment. However, the amount of incremental interest expense, proposed financial maintenance covenant levels, length of any maturity extension, and potential for a required paydown as part of the amendment could meaningfully affect the company’s credit profile and will be the focus of the review,” the ratings agency said.

“An amendment that provides Media General the ability to generate meaningful free cash flow and repay debt, as well as significantly reduce refinancing risk could lead to confirmation of the existing ratings. An amendment that results in interest expense consuming most of the company’s unlevered cash flow and does not meaningfully address the March 2013 maturity could lead to a downgrade,” Moody’s said of the possible outcomes of the review.

On Review for Possible Downgrade:

..Issuer: Media General, Inc.

….Corporate Family Rating, Placed on Review for Possible Downgrade, currently B3

….Probability of Default Rating, Placed on Review for Possible Downgrade, currently B3

….Senior Secured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently B3

Outlook Actions:

..Issuer: Media General, Inc.

….Outlook, Changed To Rating Under Review From Negative